The following video is part of our "Motley Fool Conversations" series, in which analyst John Reeves and advisor David Meier discuss topics across the investing world.
Income investors should not just look at today’s yield. Instead, they should think about what tomorrow’s yield could be. And to do that, investors should look for companies with dividends that can grow. Two examples are home-improvement retailer Lowe’s, and Corning. Both have relatively low payout ratios, so their dividends may be able to grow for quite a while. Of course, there are classic dividend payers like McDonald’s and Altria, which are interesting because they are still increasing their dividends. The one John and David think is most interesting is Nike. Here is a great company that’s very mature and continues to generate lots of cash flow. Its yield is 1.5% today, as the company continues to grow. But David would bet it will be paying out much more of its cash 10 years from now. That would be some solid dividend growth.
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David Meier has no positions in the stocks mentioned above. John Reeves has no positions in the stocks mentioned above. The Motley Fool owns shares of Corning and McDonald's. Motley Fool newsletter services recommend Corning, McDonald's, and Nike. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.